credit

Examples of credit in the following topics:

• Hamilton's Economic Policy

  • In 1789, Congress authorized Hamilton to assess the public debt situation and to submit reports with recommendations for strengthening the government's credit.
  • In his "Report on Public Credit," Hamilton also made a controversial proposal to streamline debt repayment by assuming state debt into the federal debt, essentially making the federal government responsible for all debt repayment and giving it much more power.
  • In Hamilton's "Second Report on the Public Credit," submitted to Congress in 1790, he recommended the chartering of a national bank, modeled on the Bank of England.
  • Furthermore, they contended that the creation of such a bank violated the Constitution, which specifically stated that congress was to regulate weights and measures and issue coined money, rather than mint and bills of credit, and prohibited the chartering of private corporations.
  • Secretary of the Treasury, Alexander Hamilton , shown here in a 1792 portrait by John Trumbull, released the “Report on Public Credit” in January 1790.

• The Financial Crisis

  • By 2008, credit card debt had risen to over $1 trillion.
  • Even though CDOs consisted of subprime mortgages, credit card debt, and other risky investments, credit ratings agencies had a financial incentive to rate them as very safe.
  • Economies worldwide slowed during this period as credit tightened and international trade declined.
  • Unable to receive credit from now-wary banks, smaller businesses found that they could not pay suppliers or employees.
  • Without access to credit, consumer spending declined.

• Honor and Violence

  • South, a society organized around plantation agriculture in which production circles were longer-term than those of their manufacturing-oriented northern counterparts, plantation owners were often highly leveraged and heavily dependent on personal credit to carry them through to the harvesting and sale of their goods.
  • Thus, preserving personal credit was highly important to the livelihoods of plantation owners.
  • Given that the credit markets were rather opaque until the early 20th century in the South--lenders could not readily view an applicant's financial statements--being perceived as "honorable" was almost essential to being approved for loans.
  • Thus, the word "honor" was almost culturally synonymous with "creditworthiness. " The long-term economic penalties for having one's reputation ruined included limited access to credit and diminished political influence.

• The New Era

  • The economic bubble of the late 1920s under Hoover was reflected in the extension of credit to a dangerous degree, including in the stock market, which rose to record high levels.
  • Dangerously high credit levels combined with excessive speculation in the stock market led to the Stock Market Crash of 1929.
  • Yet the dangerous practices of credit extensions, stock speculation and excessive government spending under Hoover brought the good times to a calamitous end.
  • President Herbert Hoover advocated individualism and business enterprise, but his policies that created an economic boom enabled credit extensions and speculation that resulted in the Stock Market Crash of 1929.

• The First National Bank

  • Against opposition, the First National Bank was established to improve the nation's credit under the newly enacted Constitution.
  • In Hamilton's Second Report on the Public Credit, submitted to Congress in 1790, he recommended the chartering of a national bank, modeled on the Bank of England.
  • Furthermore, they contended that the creation of such a bank violated the Constitution, which specifically stated that congress was to regulate weights and measures and issue coined money, rather than mint and bills of credit, and prohibited the chartering of private corporations.

• Inadequate Currency

  • The crop-lien system is a credit system that became widely used by farmers in the United States in the South from the 1860s to the 1920s.
  • The crop-lien system was a way for farmers to get credit before the planting season by borrowing against the value for anticipated harvests.
  • Local merchants provided food and supplies all year long on credit.
  • The credit system was used by land owners, sharecroppers, and tenant farmers.
  • The merchants had to borrow the money to buy supplies, and in turn charged the farmer interest as well as a higher price for merchandise bought on such credit.

• The Confederation's Weaknesses

  • Although historians generally agree that the Articles were too weak to hold the fast-growing nation together, they do give them credit to the settlement of the western issue, as the states voluntarily turned over their lands to national control.
  • State legislatures were unable or unwilling to resist attacks upon private contracts and public credit.

• The Panic of 1819

  • When existing banks refused to lend money to small farmers and others without a credit history, state legislatures chartered new banks to meet the demand.
  • The money they received in return was credited toward their debt.
  • The act also extended the credit period to eight years.

• The Government Debt

  • Grant's administration pursued a series of policies to strengthen public credit, reform the Treasury, and reduce the debt.
  • Grant's first move upon taking office was signing the Public Credit Act of 1869, which the Republican Congress had just passed.

• Agriculture, Tenancy, and the Environment

  • The landowner provided land, housing, tools and seed, and perhaps a mule, and a local merchant provided food and supplies on credit.
  • Other solutions included the crop-lien system (where the farmer was extended credit for seed and other supplies by the merchant), a rent labor system (where the former slaves rents his land but keeps his entire crop), and the wage system (worker earns a fixed wage, but keeps none of his crop).
  • The landowner would extend the farmer shelter, food, and necessary items on credit to be repaid out of the tenant's share of the crop.